Forget 12/21: Today We are 1331 Days Without A Budget

In order to understand the magnitude of government spending, debt and fiscal cliff “solutions”, it is helpful to scale down the numbers to more manageable ones that we are more accustomed to. Most citizens cannot properly comprehend the magnitude of the government finances because the amounts with which we are dealing were — at one time — unimaginable.

The best way to visualize the numbers is to reduce each figure by $10 million ($10,000,000 – or 8 zeros). So for instance, $2.5 trillion becomes $25,000 and so forth. Then, we can apply those numbers for a typical family in three parts: 1) Annual Deficit; 2) Current Debt (“Shadow Debt”); and 3) Entitlement (“Future”) Debt. The following scenario will be based on a family of three. And finally, we can see the proposed fiscal cliff solutions and their impact with these scaled down numbers.

Total Current Financial Picture for a Family of Three
Annual Income: $25,000
Annual Spending: $38,000
Annual Expenses/Deficit per year: $13,000
Current Government “Shadow” Debt: $156,000 (ie. like mortgage & credit cards)
Promised Future Entitlement (SS and Medicare) Debt: $603,000

Therefore, total debt on a mere $25,000 Income is $759,000 PLUS $13,000 in annual added deficits Ask yourself is that even remotely affordable or sustainable? Now multiply that by 10 Million (10,000,000), and you’ll have the real debt numbers for the government.

And those debt “Fiscal Cliff” Solutions for the Family Scenario?
—Obama’s Plan: cuts a mere $812 a year for 10 years and adds $1242 in revenue
— Boehner’s Plan: cuts a mere $955 a year for 10 years and adds $955 in revenue.

These numbers, brought down to equivalent figures, are a scary and sober reminder about just how deep in debt our country is. Both solutions barely make a dent in solving our fiscal crisis. So, what do we do? Where do we go from here? What reforms are needed — both short and long-term?